All Independent Insurance policies will be cancelled by July 31, the British Insurance Brokers' Association (Biba) has revealed, following its meeting with liquidators Pricewaterhousecoopers (PWC).
Biba chief executive Mike Williams and Aon, Marsh, Willis, Jardine Lloyd Thompson, Health Lambert and HSBC attended the meeting with PWC's Dan Schwarzmann and Jeremy Webb.
PWC confirmed letters were sent on July 10 to private policyholders, invoking cancellation clauses in policies where one existed. Policyholders were invited to cancel policies without cancellation clauses.
If the policy has a cancellation provision and is protected under the Policyholders' Protection Act, there may be a 90% refund of the pro-rata premium by the Policyholders' Protection Board (PPB). If the policy has no cancellation provision, the returned premium will become an unsecured debt against the company. If the premium has not been paid, PWC will chase the policyholder for the pro-rata time-on-risk premium.
The same system will work for corporate policyholders, except that returned premiums will be handled under the scheme of arrangement. “Some clients might not be keen to cancel their compulsory covers, because the PPB will still be on the hook for claims and defence costs,” Williams said. He said PWC would pursue brokers for net payments.
The meeting also covered premium set-off, claims management, Pool Re and insurance premium tax. Full details have been posted on the Insurance Times website (insurancetimes.co.uk.).
Biba was going to seek a meeting with the PPB, since it had yet to make a formal statement on the situation.
Biba also met with Norwich Union, Axa, Royal & Sunalliance, Zurich and Allianz Cornhill on June 29.
Williams said insurers warned prices would increase on some lines and brokers might find it difficult to place construction and food business. “If they've taken on large chunks of business, that will mitigate continuing improvements in service standards,” he said.